Emerson Electric (EMR) Gave Us a Raise with Annual Dividend Increase
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Just last week our family got another raise and we didn’t have to lift a finger to earn it.
A few years ago, we decided to invest a couple thousand dollars in a dividend paying stock … instead of using that money to purchase something we didn’t really need. We invested in a company that would pay us back in the form of dividends 4 times a year … and hopefully raise those dividends annually.
This most recent raise we got was rather small I will admit. However, the company gave us a small raise last year too. And there is a very good chance they will give us yet another raise about the same time next year.
Over time these increases to our income add up year after year.
The most recent dividend increase from a stock we own was from Emerson Electric (EMR).
EMR Shareholders Get a 1% Raise
Emerson Electric (EMR) recently announced an annual dividend increase. The company has been consistently raising dividends for the past 60+ years. How amazing is that? The company has been increasing dividends for over 6 decades!
Company shareholders will now receive $0.485 in quarterly dividends for each share they own … instead of $0.480 paid previously. This increase does not meet our desired dividend growth rate of over 6% … not even close.
The latest increase bumps the annual dividend for EMR up to $1.94 per share compared to $1.92 just last quarter.
Overall, that is a 1.04% increase in dividend income.
While not a 6% hike (or even close), Emerson Electric still gave shareholders a raise and have been consistently doing it for a very long time.
How Much Extra Income?
We currently only own 50.0 shares of EMR in our taxable Money Sprout Index. These shares were purchased in small lots during 2015 and 2016 from our Robinhood account.
Emerson Electric has been consistently increasing dividends each year for us since we purchased our first share.
This latest dividend increase has pushed our 12 month forward dividend income for EMR up to $97.00, compared to $96.00 last quarter.
That is an annual dividend income increase of $1.00. That certainly isn’t very much of an increase … but it is a dollar more than we earned last year.
Whether they are large or small, all of these increases can really add up over the months and years.
With this latest increase by Emerson Electric, along with recent stock purchases, dividend reinvestment, and other company announced increases … our annualized forward dividend income has risen to $2,797.38.
Dividend Growth for EMR
We have owned shares of Emerson Electric (EMR) for over 2.5+ years now. Our first purchase was 10 shares back in April 2015. We slowly added 40 additional shares through our Robinhood account from our first purchase up until May 2016.
As mentioned earlier, the company has been raising dividends for the past 60+ years. However, the dividend growth has recently declined which is a bit of a concern.
Take a look at the annual dividend payments since 2012 –
- 2012 – $1.610
- 2013 – $1.660
- 2014 – $1.760
- 2015 – $1.885
- 2016 – $1.905
- 2017 – $1.925 (projected)
Note – The 2017 dividend has been prorated to reflect a dividend increase during the year (after the third quarter payout).
As you can tell from the numbers above, EMR dividends have been raised consistently over the past several years … but at a slowing pace.
Typically, we look for stocks with a 5-year or 10-year dividend growth rate (DGR) of 6% or higher. Emerson Electric doesn’t hit that target but as at least been consistent in their raises … which is also something we look for and let’s us sleep at night knowing we are increasing our income.
Here are a few average growth rates for shares of Emerson Electric –
- 1 Year DGR – 1.05% (2016 to 2017)
- 3 Year DGR – 3.07% (2014 to 2017)
- 5 Year DGR – 3.67% (2012 to 2017)
Emerson Electric – Buy, Sell, or Hold?
As stated earlier, we started buying shares of Emerson Electric (EMR) back in April 2015 and eventually accumulated a total of 50. Since these shares are held in our Robinhood account, we have not earned any DRiP shares … and instead have reinvested our funds into shares of other stocks.
Since buying our first shares back in 2015, we have earned $167.63 in dividends from Emerson Electric.
Here are a few stats from owning stock in Emerson Electric –
- Total Investment – $2,565.98
- Shares Purchased – 50.000
- Dividends Earned – $167.63
- DRiP Shares – 0.000
To date, we have earned back 6.53% of our overall investment in the company … just from dividends.
We are also currently earning a 3.74% yield on cost on our shares of EMR.
While owning shares of Emerson Electric over the past 2+ years has been good … it doesn’t mean we are buying new shares.
At the time of this writing, EMR meets SOME of our stock screen criteria based on the following metrics –
- Current Yield – 2.98%
- Payout Ratio – 76.19%
- P/E Ratio – 25.58
The company meets one of the criteria that we look for when picking stocks. For example, the company does have a current yield >= 2% but that is about it.
The payout ratio is well above 60% and the PE ratio is above 20. In addition, the 5-yr dividend growth rate is well under 6%.
Based on those metrics, we feel there are better dividend growth opportunities out there at this time.
Based on all of this, we have EMR as a HOLD for now. As long as the company continues to raise or at least maintain the current dividend … we will hold our shares. However, if the company makes a dividend cut … then we will sell our shares and reinvest the assets into a better dividend stock.
For now … we hold our shares and will continue to collect $97 a year from the company!
Full Disclosure – At the time of this writing, we owned shares in the following stocks noted in this post – EMR. The material above is not a recommendation to buy. Please do your own research on a company before deciding to invest.